HomeMy WebLinkAboutAgenda Report - February 1, 2023 H-01CITY OF
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CALIFORNIA
AGENDA ITEM H
40 1
COUNCIL COMMUNICATION
AGENDA TITLE: Receive for File the Following Reports and Financial Statements Submitted by The Pun
Group, LLP and Finance Department for Fiscal Year 2021-2022, Including the GANN Limit
and Single Audit Report
MEETING DATE: February 1, 2023
PREPARED BY: Accounting Manager
RECOMMENDED ACTION: Receive for file the following reports and financial statements submitted by
The Pun Group, LLP and the Finance Department for Fiscal Year 2021-
2022 including the GANN Limit and Single Audit Report.
BACKGROUND INFORMATION: The annual audit was conducted to assure the City Council and other
interested parties that the City's financial reports are prepared in
accordance with generally accepted accounting principle (GAAP) against
loss from unauthorized use or disposition of assets and that the City has complied with all agreements and
covenants to obtain grant funds and debt financing. The Pun Group, LLP issues an "unmodified opinion".
The agreed upon procedures for the above reports, were agreed upon by the City and The Pun Group and
performed solely to assist in meeting the requirements of Section 1.5 of Article XIII -13 of the California
Constitution. The agreed upon procedures engagements were conducted in accordance with attestation
standards established by the American Institute of Certified Public Accountants. The City's management is
responsible for preparing each of the reports.
The reports will be provided to Federal and State oversight agencies, bond trustees and insurance companies
for their review and evaluation. Copies of the reports are provided to the City Council and are also available to
the public by contacting the Financial Services Division.
FISCAL IMPACT:
No fiscal impact
FUNDING AVAILABLE: No funding requested.
Q/m�
Andrew Keys
Deputy City Manager/Internal Services Director
APPROVED: 2023 nim P5rr
Stephen Schwabauer, City Manager
City of Lodi
Lodi, California
Independent Accountants' Report on
Agreed -Upon Procedures Applied to
Appropriations Limit Schedule
For the Year Ending June 30, 2023
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
INDEPENDENT ACCOUNTANTS' REPORT ON
APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
2121 North Calllbrele, Sults 290
Walnut CreekCallfomla94596
www.pungroup.cpa Cz
We have performed the procedures enumerated below to the accompanying Appropriations Limit Schedule of the
City of Lodi, California (the "City") for the year ending June 30, 2023. The management at the City is responsible
for the Appropriations Limit Schedule.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose
of meeting the requirements set forth in Section 1.5 of Article XIII -B of the California Constitution. These
procedures, which were suggested by the League of California Cities and presented in the publication entitled
Agreed-upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII -B of the California
Constitution, were performed solely to assist you in meeting the requirements. This report may not be suitable for
any other purpose. The procedures performed may not address all the items of interest to a user of this report and
may not meet the needs of all users of this report and, as such, users are responsible for determining whether the
procedures performed are appropriate for their purposes.
The procedures and associated findings are as follows:
1. We obtained the completed worksheets used by the City to calculate its appropriations limit for the year
ending June 30, 2023, and compared the limits and annual adjustment factors that were adopted by resolution
2022-133 of the City Council. We also compared that the population and inflation options were selected by a
recorded vote of the City Council.
Finding: No exceptions were noted as a result of our procedures.
2. For the accompanying Appropriations Limit Schedule, we added the prior year's limit to the total
adjustments, and compared the resulting amount to the current year's limit.
Finding: No exceptions were noted as a result of our procedures.
3. We compared the current year information presented in the accompanying Appropriations Limit Schedule to
corresponding information in worksheets used by the City.
Finding: No exceptions were noted as a result of our procedures.
4. We agreed the appropriations limit presented in the accompanying Appropriations Limit Schedule to the
appropriations limit adopted by the City Council during the year.
Finding: No exceptions were noted as a result of our procedures.
ORANGE COUNTY • SAN DIEGO SACRAMENTO • WALNUT CREEK • LAS VEGAS • PHOENIX 000
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Page 2
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in
accordance with attestation standards established by the American Institute of Certified Public Accountants. We were
not engaged to and did not conduct an examination or review engagement, the objective of which would be the
expression of an opinion or conclusion, respective on the accompanying Appropriations Limit Schedule.
Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other
matters might have come to our attention that would have been reported to you.
We are required to be independent of the City, and to meet our other ethical responsibilities, in accordance with the
relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the City Council and management of the City and is not
intended to be and should not be used by anyone other than those specified parties. However, this report is a matter of
public record and its distribution is not limited.
Walnut Creek, California
November 29, 2022
City of Lodi
Appropriations Limit Schedule
For the Year Ending June 30, 2023
A. Appropriations Limit from FY 2021-2022
B. Adjustment Factors:
1. Growth in City Population
2. California per Capita Personal Income Growth
3. Adjustment Factor
C. Annual Adjustment Increase
D. Other Adjustments:
1) Loss reponsibility (-)
2) Transfer to private (-)
3) Transfer to fees (-)
4) Assumed responsibility (-)
E. Total Adjustments
F. Appropriations Limit FY 2022-2023
See accompanying Notes to the Appropriations Limit Schedule.
3
Amount
Source
$ 124,907,868
Prior Year appropriations
limit adopted by the City
1.0064
State Department of Finance
1.0755
State Department of Finance
1.0824
B 1 *B2
10,290,310
A * (133 - 1)
—
N/A
—
N/A
—
N/A
—
N/A
10,290,310 (C+D)
$ 135,198,178 (A+E)
City of Lodi
Notes to the Appropriations Limit Schedule
For the Year Ending June 30, 2023
Note 1— Purpose of Limited Procedures Review
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California
governmental agencies are restricted to the amount of annual appropriations from proceeds of taxes. Effective for
years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the
appropriations limit is subject to a limited procedures review in connection with the annual audit.
Note 2 — Method of Calculation
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1, 1990, the appropriations limit is
required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population
factors discussed in Notes 3 and 4 below.
Note 3 — Population Factors
A California governmental agency may use as its population factor either the annual percentage change of the
jurisdiction's own population or the annual percentage change in population of the county where the jurisdiction is
located. The factor adopted by the City for the year 2022-2023 represents the annual percentage change in
population for the City.
Note 4 — Inflation Factors
A California governmental agency may use as its inflation factor either the annual percentage change in the 4th
quarter per capita personal income (which percentage is supplied by the State Department of Finance) or the
percentage change in the local assessment roll from the preceding year due to the change of local nonresidential
construction. The factor adopted by the City for the year 2022-2023 represents the percentage change in California
per capita personal income.
Note 5 — Other Adjustments
A California government agency may be required to adjust its appropriations limit when certain events occur, such
as the transfer of responsibility for municipal services to, or from, another government agency or private entity.
The City had no such adjustments for the year 2022-2023.
City of Lodi
Lodi, California
Single Audit and
Independent Auditors' Reports
For the Year Ended June 30, 2022
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
City of Lodi
Table of Contents
Independent Auditors' Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards .................................
Independent Auditors' Report on Compliance for Each Major Federal Program,
on Internal Control Over Compliance Required by the Uniform Guidance,
and on Schedule of Expenditures of Federal Awards ...................................................
Schedule of Expenditures of Federal Awards..........................................................................
Notes to the Schedule of Expenditures of Federal Awards ......................................................
Page
1
3
.................................. 7
.................................. 8
Schedule of Findings and Questioned Costs.............................................................................................................. 9
This page intentionally left blank
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
2121 North California, Suite 290
Walnut Creek, California 94596
www.pungroup.cpa (M
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditors' Report
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller
General of the United States, the financial statements of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City of Lodi, California (the "City"), as of and for the
year ended June 30, 2022, and the related notes to the basic financial statements which collectively comprise the City's
basic financial statements and have issued our report thereon dated November 29, 2022.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control over
financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances
for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion
on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of
the City's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will
not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe than a material weakness, yet is important enough to
merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and
was not designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we
consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
ORANGE COUNTY • SAN DIEGO • SACRAMENTO • WALNUT CREEK • LAS VEGAS • PHOENIX 000
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Page 2
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's basic financial statements are free from material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements, noncompliance with which could have a direct and material effect on the financial statement. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do
not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in
considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
,7;j `;4�, �-7'
Walnut Creek, California
November 29, 2022
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
2121 North California, Suite 290
Walnut Creek, California 94596
www.pungroup.cpa (M
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM: REPORT ON INTERNAL
CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF
FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE
Independent Auditors' Report
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Lodi, California's (the "City") compliance with the types of compliance requirements
described in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major
federal programs for the year ended June 30, 2022. The City's major federal program is identified in the summary of
the auditors' results section of the accompanying schedule of findings and questioned costs.
In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above
that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2022.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States
of America; the standards applicable to financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part
200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the
"Uniform Guidance"). Our responsibilities under those standards and the Uniform Guidance are further described in
the Auditor's Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with
relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not
provide a legal determination of the City's compliance with the compliance requirements referred to above.
Responsibilities of Managementfor Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation,
and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations,
rules, and provisions of contracts or grant agreements applicable to the City's federal programs.
ORANGE COUNTY • SAN DIEGO • SACRAMENTO • WALNUT CREEK • LAS VEGAS • PHOENIX 000
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Page 2
Auditors' Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance
requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's
compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and
therefore is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the
United States of America, Government Auditing Standards, and the Uniform Guidance will always detect material
noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for
that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. Noncompliance with the compliance requirements referred to above is considered material
if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a
reasonable user of the report on compliance about the City's compliance with the requirements of each major federal
program as a whole.
In performing an audit in accordance with auditing standards generally accepted in the United States of America,
Government Auditing Standards, and the Uniform Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform
audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence
regarding the City's compliance with the compliance requirements referred to above and performing such
other procedures as we considered necessary in the circumstances.
Obtain an understanding of the City's internal control over compliance relevant to the audit in order to design
audit procedures that are appropriate in the circumstances and to test and report on internal control over
compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over
compliance that we identified during the audit.
Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does
not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect
and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material
weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant
deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in
internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the Auditors'
Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal
control over compliance that might be material weaknesses or significant deficiencies in internal control over
compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over
compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant
deficiencies in internal control over compliance may exist that were not identified.
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Page 3
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over
compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal
control over compliance and the results of that testing based on the requirements of the Uniform Guidance.
Accordingly, this report is not suitable for any other purpose.
Schedule of Expenditures of Federal Awards
We have audited the financial statements of the governmental activities, the business -type activities, each major fund,
and the aggregate remaining fund information of the City as of and for the year ended June 30, 2022, and have issued
our report thereon dated November 29, 2022 which contained unmodified opinion on those financial statements. Our
audit was conducted for the purpose of forming our opinion on the City's Basic Financial Statements. The
accompanying Schedule of Expenditures of Federal Awards, as required by Title 2 U.S. Code of Federal Regulations
Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is
presented for purposes of additional analysis and is not a required part of the financial statements. Such information is
the responsibility of management and was derived from and relates directly to the underlying accounting and other
records used to prepare the financial statements. The information has been subjected to the auditing procedures applied
in the audit of the basic financial statements and certain other procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the financial statements or to the
financial statements themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly
stated in all material respects in relation to the basic financial statements as a whole.
,r, A, Z-7'
Walnut Creek, California
January 19, 2023, except for the Schedule of Expenditures of Federal Awards, which is as of November 29, 2022.
This page intentionally left blank.
City of Lodi
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2022
U.S. Department of Justice
Passed through California Office of Traff c Safety:
Bulletproof Vest Partnership
U.S. Department of Transportation
Federal Transit Cluster
Direct Program:
FFY 2018 Operating (Lodi FY 17/18) and Bus Stop Improvements Project
Lodi 5307 CARES Act Operating Assistance for FY 19-20 and FY 20-21
Lodi 5307 and 5339 Operating Assistance and Bus Replacement for FYI 9,
FY20 and FY21
ARPA Section 5307 Transit Operating Assistance
Total Federal Transit Cluster
Highway Planning and Construction Cluster
Passed through California Department of Transportation:
Highway Planning and Construction
Total Planning and Construction Cluster
Passed through California Office of Traffic Safety:
Selective Traffic Enforcement Program (STEP)
U.S. Environmental Protection A¢encv
Direct Program:
Brownfields Assessment and Cleanup Cooperative Agreements
U.S. Department of Treasury
Direct Program:
Coronavirus State and Local Fiscal recovery Funds
Passed through California Department of
Community Services and Development (CSD)
California Arrearage Payment Program (CAPP)
Passed -Through State Water Resources Control Board:
California Water Arrearage Payment Program (CW WAPP)
California Wastewater Arrearage Program (CWWAPP)
16.607 BA-20005-SM02
Federal
Total U.S. Department of Transportation
Amount
Federal Grantor/Pass - Through
Assistance
Pass -Through Entity
Federal Provided to
Grantor/Program Title
Listing Number
Identifying Number
Expenditures Subrecipients
U.S. Department of Housin¢ and Urban Development
1,473,924
CDBG - Entitlement Grants Cluster
393,302
393,302
Direct Program:
20.608 & 20.006 PT21164
43,947
Total U.S. Department of Transportation
Community Development Block Grant
14.218
B -16 -MC -06-0038
$ 77,014 $
Community Development Block Grant
14.218
B -19 -MC -06-0038
24,569
Community Development Block Grant
14.218
B -20 -MC -06-0038
228,911
Community Development Block Grant
14.218
B -20 -MW -06-0038
166,854
Community Development Block Grant
14.218
B -21 -MC -06-0038
293,776
Total CDBG - Entitlement Grants Cluster
791,124
Total U.S. Department of Housing
and Urban Development
791,124
U.S. Department of Justice
Passed through California Office of Traff c Safety:
Bulletproof Vest Partnership
U.S. Department of Transportation
Federal Transit Cluster
Direct Program:
FFY 2018 Operating (Lodi FY 17/18) and Bus Stop Improvements Project
Lodi 5307 CARES Act Operating Assistance for FY 19-20 and FY 20-21
Lodi 5307 and 5339 Operating Assistance and Bus Replacement for FYI 9,
FY20 and FY21
ARPA Section 5307 Transit Operating Assistance
Total Federal Transit Cluster
Highway Planning and Construction Cluster
Passed through California Department of Transportation:
Highway Planning and Construction
Total Planning and Construction Cluster
Passed through California Office of Traffic Safety:
Selective Traffic Enforcement Program (STEP)
U.S. Environmental Protection A¢encv
Direct Program:
Brownfields Assessment and Cleanup Cooperative Agreements
U.S. Department of Treasury
Direct Program:
Coronavirus State and Local Fiscal recovery Funds
Passed through California Department of
Community Services and Development (CSD)
California Arrearage Payment Program (CAPP)
Passed -Through State Water Resources Control Board:
California Water Arrearage Payment Program (CW WAPP)
California Wastewater Arrearage Program (CWWAPP)
16.607 BA-20005-SM02
16,645
Total U.S. Department of Transportation
16,645
20.507 CA -2018-102-00
73,924
20.507 CA -2020-199-00
1,155,526
20.507 CA -2021-252-00
237,488
20.507 CA -2022-190-00
6,986
1,473,924
20.205 STPL-5154(049)
393,302
393,302
20.608 & 20.006 PT21164
43,947
Total U.S. Department of Transportation
1,911,173
66.818 98T09801
64,413
Total U.S. Environmental Protection Agency
64,413
21.027 n/a
6,189,462
21.027 21.027
1,039,755
21.027 21.027
278,518
21.027 21.027
353,462
Total U.S. Department of Treasury
7,861,197
Total Expenditures of Federal Awards $
10,644,552 $
See accompanying Notes to the Schedule of Expenditures of Federal Awards.
7
City of Lodi
Notes to the Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2022
Note 1— Reporting Entity
The financial reporting entity, as defined by the Governmental Accounting Standard Board ("GASB"), consists of the
primary government, which is the City of Lodi, California (the "City"), organizations for which the primary
government is financially accountable, and other organizations for which the nature and significance of their
relationship with the primary government are such that exclusion would cause the reporting entity's financial
statements to be misleading or incomplete.
Note 2 — Basis of Accounting
Funds received under the various grant programs have been recorded within the governmental and proprietary fund
types of the City. The City utilizes the modified accrual method of accounting for the governmental fund types and the
full accrual method of accounting for the proprietary fund types. The accompanying Schedule of Expenditures of
Federal Awards ("Schedule") is presented in accordance with the requirements of Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards (Uniform Guidance). Therefore, some amounts presented in the schedule may differ from amounts presented
in, or used in, the preparation of the City's basic financial statements.
Note 3 — Schedule of Expenditures of Federal Awards
The accompanying Schedule presents the activity of all federal financial assistance programs of the City. For the
purposes of this schedule, federal awards include both federal financial assistance received directly from a federal
agency, as well as federal funds received indirectly by the City from a non-federal agency or other organization. Only
the portion of program expenditures reimbursable with such federal funds is reported in the accompanying Schedule.
Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program
expenditures that were funded with state, local or other non-federal funds are excluded from the accompanying
Schedule. The Schedule was prepared from only the accounts of various grant programs and, therefore, does not
present the financial position, change in fund balance, or results of operations of the City.
Note 4 — Indirect Cost Rate
The City has not elected to use the 10 -percent de minimis indirect rate as allowed under the Uniform Guidance.
City of Lodi
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2022
Section I — Summary of Auditor's Results
Financial Statements
Type of report the auditors issued on whether the financial
statements audited were prepared in accordance with GAAP: Unmodified
Internal control over financial reporting:
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? None Reported
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major programs:
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? None Reported
Type of auditor's report issued on compliance for major programs Unmodified
Any audit findings disclosed that are required to be reported in
accordance with 2 CFR 200.516(a)? No
Identification of major programs:
Federal Assistance
Name of Federal Program or Cluster Listing Number(s) Expenditures
Coronavirus State and Local Fiscal Recovery Funds 21.027 $ 7,861,197
Total Expenditures of All Major Federal Programs $ 7,861,197
Total Expenditures of Federal Awards $ 10,644,552
Percentage of Total Expenditures of Federal Awards 73.85%
Dollar threshold used to distinguish between type A and type B program
Auditee qualified as low-risk auditee in accordance with 2 CFR 200.520?
9
$750,000
Yes
City of Lodi
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
Section II — Financial Statement Findings
A. Current Year Findings — Financial Statement Audit
No current year financial statement findings were noted.
B. Prior Year Findings — Financial Statement Audit
Finding 2021-001 Lack of Proper Timecard Authorization and Project Documentation
Criteria:
Management is responsible for the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error. Internal control is the process designed to ensure reliable financial reporting, effective and efficient
operations, and compliance with applicable laws and regulations. Safeguarding assets against theft and
unauthorized use, acquisition, or disposal is also part of internal control. Internal controls consist of an
organization's overall control environment and control activities. Control activities are the specific policies and
procedures management uses to achieve its objectives. The most important control activities involve segregation of
duties, proper authorization of transactions and activities, adequate documents and records, physical control over
assets and records, and independent checks on performance.
An overall purpose of internal control over financial reporting is to foster the preparation of reliable financial
statements.
Condition:
During the audit, we identified the following conditions in internal control:
Payroll
We found that four (4) out of the forty (40) timesheets or timecards that were selected for testing for proper
authorization, were missing the required approvals.
Capital Assets
We found in two (2) out of the fourteen (14) Capital Improvement Projects ("CIP") selected for testing, project
completion documentation and cutoff procedures related to the timing of when asset should be placed in service
and the amounts were not accurate. This caused assets to be placed in service prior to their relevant completion
date. A total of approximately $2.1M was placed in service as a completed project prior to its completion date.
Though this did not impact the overall value of capital assets or related depreciation, errors could grow in
magnitude if undetected.
Cause:
The City has internal control processes in place that are manual such as the timesheet approval process and
submission of documentation. As a result, these processes have higher risk that they may not be fully executed in
compliance with the policy and procedures without a control process in place to track each item. In a large
organization like the City, this becomes more difficult based on the volume of data it has to process on a daily
basis and with limited staffing.
10
City of Lodi
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
Section II — Financial Statement Findings (Continued)
B. Prior Year Findings — Financial Statement Audit (Continued)
Finding 2021-001 Lack of Proper Timecard Authorization and Project Documentation (Continued)
Effect:
The lack of proper authorization of transactions and cutoff procedures negates that the City's personnel adhered to
established guidelines unless managers authorize another course of action. When documents and records are
missing authorizations as a key control, the City increases its risk that financial statements will not be accurate.
Controls designed to ensure adequate recordkeeping include authorization and review of supporting documents
over the amounts and time period of transaction in the financial system. Otherwise accounting errors can go
undetected and not be corrected in a timely manner.
Context:
The City has been working steadily to improve its internal control over financial accounting and reporting through
the institutionalization of improved policies, procedures, and automation of existing manual controls.
Recommendation:
We recommend that the timecard and project completion and capitalization procedures be evaluated for
automation within the Tyler Munis system to the extent possible. In the absence of automated controls, the City
should contemplate whether additional personnel are needed in order to enhance its review and authorization
process within the internal controls.
View of Responsible Officials:
The City concurs with the recommendation. Due to the COVID-19 global pandemic, the City was only able to
partially implement all recommendations and improvements are still ongoing. However, new procedures including
additional checks and balances have been put in place to ensure more accurate closing and payroll processes. New
procedures have been drafted by an outside industry expert to ensure better processing of bank reconciliations.
New restrictions have been placed in Munis so no batches will automatically release without review. In addition,
all batch paperwork will be stamped released, with the date, and the signature/initials of the one release the batch
for posting. Training to departments on timesheet management will be provided by the end of the current fiscal
year. City will also be implementing workflow processes and moving to Employee Self Service for time
management of employees.
Status:
Implemented.
11
City of Lodi
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
Section III — Federal Award Findings (Continued)
A. Current Year Findings and Questioned Costs — Major Federal Award Program Audit
No findings or questioned costs were noted on the City's major federal programs for the year ended June 30, 2022.
B. Prior Year Findings and Questioned Costs — Major Federal Award Program Audit
No findings or questioned costs were noted on the City's major federal programs for the year ended June 30, 2021.
12
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
CITY OF LODI
Presentation to the City Council
GANN Limit For the Fiscal Year Ended June 30, 2023
Single Audit Report For the Fiscal Year Ended June 30, 2022
Agenda Item: H-01
February 1, 2023
i,
ri
r7
A
CONTENTS
• Scope of Work
• Audit Results
• GANN Limit
• Single Audit
• Thank You!
V N Caul'
ACCOUNTANTS & ADVISORS
SCOPE OF WORK
EffiNGROUV
ACCOUNTANTS & ADVISORS
SCOPE OF WORK
• Financial Statement Audit
• Annual Comprehensive Financial Report — For Fiscal Year Ending June 30, 2022
(Presented to Council)
• Compliance Audit
• Single Audit — Federal Expenditures Audit — For Fiscal Year 2021-2022
• Agreed Upon Procedures
• GANN Limit — For Fiscal Year 2022-2023
ThN GR UP
ACCOUNTANTS & ADVISORS
AUDIT RESULT
EffiNGROUV
ACCOUNTANTS & ADVISORS
Flo
Audit Results - GANN Limit
• Certain agreed upon procedures intended to meet the purpose of the requirements set
forth in Section 1.5 of Article XIII -B, Government Spending Limitation of the
California Constitution are performed on schedules the City prepares.
• The League of California Cities suggested procedures are contained in the publication
entitled Agreed-upon Procedures Applied to the Appropriations Limitation Prescribed
by Article X111-8 of the California Constitution.
• These procedures are performed solely to assist you in meeting those requirements.
• We conduct our engagement in accordance with Attestation Standards established b)
the American Institute of Certified Public Accountants.
• We do not conduct an examination or review and accordingly do not express such an
opinion or conclusion.
• No exceptions were found as a result of performing the agreed upon procedures.
ThN GROUP
ACCOUNTANTS & ADVISORS
U
Audit Results - Single Audit
• Perform audit in accordance with Government Auditing Standards and the
Uniform Guidance issued under OMB A-133.
• Report on Internal Control over Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in Accordance with Government Auditing
Standards
Report on Compliance for Each Major Federal Program; Report on Internal Control over
Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the
Uniform Guidance
ThN GROUP
ACCOUNTANTS & ADVISORS
Audit Results - Single Audit
Identification of major programs:
Federal Assistaner
[dame of Federal Program or Cluster Listing Numbrr(s) Expenditures
Coronavirus State and local Fiscal Recovery Funds 21,027 S 7,8 1,197
Total Exprnditures of All Major Federal programs S 7,861,197
Total Expenditures of Federal Awards $ 10,644,552
Section l — Summary of Auditor's results
Dollar threl Financial Statements
LLAuditce q Typc of report
statements au -c
Internal contr-c
* Mater
* Signif
Noncomplian-c
THE CROUP
ACCOUNTANTS & ADVISORS
Federal Awards
Internal control over major programs:
* Material weakness(es) identified?
* Significant deficiency(ics) identified?
Type of auditor's report issued on compliance for major programs
Any audit findings disclosed that are required to be reported in
accordance with 2 CFR 200.516(a)?
No
None Reported
Unmodified
No
•
Historical Audit Results - Single Audit
Material Weaknesses - 1 - - -
Significant Deficiencies
Instance of Noncompliance
ThN GRQUP
ACCOUNTANTS & ADVISORS
1 2 2
- 2 -
1
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
,.y
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